Mentzer: Wisconsin has the nation's best pension system. How did that happen? (column)

In this photo taken May 2012 an American Federation of State County and Municipal Employees union member wears their protest message on his shirt while rallying against the proposed pension legislation at the Illinois State Capitol in Springfield, Ill.

On my vacation I picked up a Chicago Tribune in an airport and dipped into that state's fiscal woes, which are, uh, substantial.

Our southern neighbor has the worst shortfall in the nation in its public employee pension fund - $100 billion in red ink. So they are trying to figure out what to do about that, and, you know, best of luck to them with that.

Of all the fiscal problems that have troubled Wisconsin's budget since the economy blew up five years ago, pensions have not really been one of them.

"Wisconsin's pension system is the only one in the country that is fully funded," boasts Gov. Scott Walker in his new book.

It's true! A study released last year by the Pew Center on the States found that Wisconsin was alone among the 50 states in having enough money set aside to pay its pensions and health care obligations for retirees of local and state government.

This is not new. Wisconsin's pension fund has been strong for decades, through both Democratic and Republican administrations. Whatever you think of Walker's Act 10 and subsequent budgets, the pension system was pretty strong when he inherited it and the reforms mostly did not monkey with that. (Current public employees did begin to contribute some of their cash to their pensions, which will likely turn out to be a good move for the future.)

How can this be? Seriously, how? What does Wisconsin have figured out that every other state in the union doesn't?

I recently sat down with Paul Sickel of the Wiscosnin Coalition for Retirement Security, a labor group, along with a couple of representatives of public employee unions, and asked him.

One of his answers: "There's strength in numbers." Wisconsin consolidated pension funds in the early '80s, meaning one big fund for investing rather than a lot of smaller ones that could be more easily battered around.

Another factor: The people overseeing the funds have been intentionally kept somewhat removed from the hard combat of partisan politics. The fact that pension funds didn't play much of a role in the 2011-2012 Walker recall upheaval would seem to indicate success on that score.

And here's a technical factor: The pension funds are not designed to pay out any automatic cost of living increases of the sort that Social Security recipients, for example, have come to expect. They get increases if the market conditions favor them, no increases if the market is bad. The benefit - and the cost to taxpayers - doesn't automatically ratchet up each year.

But the last, and in my opinion most mysterious, factor is sheer political will, said Dee Ives, a member of the American Federation of State, County and Municipal Employees who works at the Wisconsin Veterans Home at King. When past governors have flirted with raiding the fund, they were quickly slapped down.

"We're Wisconsin. We pay our bills," Ives said.

As coalition coordinator, Sickel's main focus is in trying to reinforce the fact that Wisconsin's pension system is quite healthy and keep legislators from the ever-present temptation to monkey with it. His basic case: More than 160,000 people in the state receive stable, affordable benefits now, and to mess with that could also mess with Wisconsin's fiscal health.

I don't have a pension and almost no one my age does. In the private sector, at least, pensions are becoming a relic of a time of more stable employment, a compact between loyal employees and large employers who would last forever, things that don't really describe today.

That doesn't necessarily mean taxpayers don't need to worry. We're just reaching the retirement of the first big 401(k) generation, workers who've been more directly responsible for retirement saving, and the numbers are not good. One-third of households have no retirement savings; the median household retirement balance for workers ages 55-64 is only around $120,000. What will happen to those who did not save enough is a big, looming problem - and potentially an expensive one for public coffers.

Wisconsin's public employees, though, won't be part of that problem.

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Mentzer: Wisconsin has the nation's best pension system. How did that happen? (column)

On my vacation I picked up a Chicago Tribune in an airport and dipped into that state's fiscal woes, which are, uh, substantial.

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